In the struggle with China over critical-minerals supply chains, the United States and its partners should focus efforts across three fronts: commercial, technological and allied coordination. Action is needed in each to overcome advantages that China has built over decades.
As the US, Australia and their friends invest billions, create price floors and form diplomatic networks to diversify supply, China will respond with its own countermeasures to maintain its supply chain dominance.
A focus on the three fronts gets to the heart of the problem.
The commercial front focuses on improving the long-term commercial viability of critical-minerals mining and processing activities. Many projects are simply not profitable enough to attract private investors because China has enough market power to keep global prices artificially low.
While China’s critical mineral export controls introduced in April 2025 have led to a 250 percent price increase, China can relax its exports control any time to flood the market and push prices down. This capability leaves investors paralysed.
In this unstable price environment, producers need long-term government support through offtake agreements and price floors to manage the topsy-turvy rare earths market.
On this front, the objective is not to outcompete China on price; it’s to build what might be called an ‘ex-China’ market, one in which producers from democracies would be shielded from artificially low and volatile prices set by Chinese producers. This is the driving motivation behind multilateral agreements such as the Forum on Resource Geostrategic Engagement.
However, commercially viable projects will struggle if non-Chinese firms still depend on Chinese technology. On the technological front, China owns a significant amount of intellectual property across the critical-minerals supply chain and is the dominant producer of numerous inputs into the production process, such as advanced furnaces and specialised chemicals.
This is supported by China’s impressive research sector, which dedicates significant attention to critical minerals. For every researcher in the US studying rare earths, China has 40 researchers focused on the same topic.
Export controls that China announced in October 2025 show it’s tightening its vice on the distribution of its technology and IP. Resources alone are not enough: producers in democratic countries need access to the technologies and know-how required to extract, process and recycle critical minerals. Producers in these democracies need to develop their own sovereign IP and limit their exposure to Chinese inputs, which can come with additional costs and risks.
Projects will fall short without allied coordination between supply and demand. The coordination front acknowledges that no single country can secure its own critical-minerals supply, which means that countries must work together. Unlocking Australian supply requires scaling up demand from the democracies, but coordinating investments along the supply chain is challenging.
Further, Chinese companies can disrupt the democracies’ efforts to coordinate. In a bid to unlock rare-earths supply, the US government has committed US$230 million (A$328 million) to Australian producer Northern Minerals. Chinese companies have increased their shareholding in Northern Minerals while failing to comply with Australian government divestment orders, impacting this promised investment.
When laid out like this, the critical-minerals challenge can feel daunting. It’s a multilayered problem where action is required across all three fronts. An adversary sits on the other side ready to respond.
The challenge is not insurmountable, but piecemeal solutions will bog down decision-makers and risk throwing good money at bad investments.
A recent United States Studies Centre report sets out how Australia and its Quad partners can make progress on all three fronts through existing policies and frameworks.
On the commercial front, parts of the mining tax system could be recalibrated to support small-scale, volatile critical-minerals projects. Royalty rates could be reduced or waived to provide a buffer during low-price periods, creating an automatic price stabiliser.
On the technological front, the Australian government should build on the momentum from its major review into research and development to boost investment and crowd-in funding towards innovative mining and processing technologies. Venture capital firm In-Q-Tel, which is backed by the US government, offers a model that directs venture capital to start-ups that could diversify critical-minerals supply chains.
On the coordination front, free trade agreements and partnerships centred around critical minerals can help bridge the gap between trusted supply and trusted demand.
The critical-minerals challenge is big and complex, but the policy solutions don’t have to be. Major government interventions such as price floors will grab the headlines, but long-term success will be measured in well-designed tax incentives, innovation and trade agreements.
China has spent decades building its dominance in critical minerals. The democracies cannot reverse that advantage overnight. But by acting across the commercial, technological and coordination fronts, Australia and its partners can build supply chains that stand resilient against Chinese coercion.
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